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jstratt

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  • What To Expect From Gilead's 2Q Earnings: The Theory Behind The Madness [View article]
    So I wanted to recap the positives and negatives of todays earnings and call.

    As an investor I was very happy with the EPS and Revenue and the prepared presentation. Once again however GILD executives managed to sabotage the shares with question and answer mistakes.

    For all the great science and leadership they have an amazing ability to stick their foot in mouth. In 3Q they totally surprised shareholders and analysts with the warehousing and damaged the shareholder value. In 4Q and 2014 year results they managed to launch off into a discussion of 46% gross to net causing great damage to shares once again.

    In 1Q GILD continued their streak talking about how pricing agreements were going into effect that would cause earnings to be lower in 2Q. Which brings us to today.

    In question and answer after the presentation GILD leaders once again outdid themselves in damaging post earnings share prices. Here is how

    Why is your guidance only $29-$30 bil revenue?

    Well we expect sales to fall off... essentially sales have peaked

    My response

    Thank you for ensuring that GILD will no longer have any chance of rising above a 10 PE. With competition perhaps 8-9 is a better future PE.

    Question - Everybody is asking about what GILD is going to buy?

    Well we have confidence in our pipeline so we dont see the need to make an acquisition. We are looking but it isnt a pressing issue (my summarization).

    My response

    Just what is it you are proud of? What is it that is going to provide future growth. The market has been saying for a year investors do not see what will provide growth in future years and awarding a 10 PE. Investors have trouble seeing that growth.

    A $170 bil company that can provide an acceptable level of growth will trade at a minimum 80% higher and should be able to double the GILD valuation. If they are aggressive like a CELG the GILD valuation could be 400% higher.

    So GILD probably just put a $120 cap on shares for the next 90 days. I hope I am wrong but that is how I view it.

    The shame is I dont think they know or necessarily believe what they said. They just dont know how to respond and cant say we low balled our estimate. They dont appear to have any concept that investors want to see evidence of a bright somewhat defined future. They dont seem to understand that a company they might want to buy wants a better future than the GILD story looking forward.

    The question will remain why should investors and partners believe a $170 bil market cap company with a pipeline suitable for a $50 bil company is a good investment.
    Jul 29, 2015. 12:10 AM | 3 Likes Like |Link to Comment
  • Gilead Q2 top line up 27%; EPS up 33%; revenue guidance raised [View news story]
    Congrats to all GILD shareholders

    As a bull I carried a larger position than normal into earnings. If GILD can get through the call without causing damage we should be big tomorrow.

    Raised guidance still seems conservative.
    Jul 28, 2015. 04:27 PM | 5 Likes Like |Link to Comment
  • Gilead Q2 top line up 27%; EPS up 33%; revenue guidance raised [View news story]
    Once again the analysts damage those who listen to them.

    Horrible performance quarter after quarter!
    Jul 28, 2015. 04:22 PM | 8 Likes Like |Link to Comment
  • Gilead Sciences beats by $0.44, beats on revenue [View news story]
    Hell Yes!!! Go GILD
    Jul 28, 2015. 04:20 PM | 3 Likes Like |Link to Comment
  • Gilead Sciences Earnings Preview [View article]
    Interesting Article!

    I certainly hope GILD hits the ball out of the park once again. Since the turn of the century 15 1/2 years ago each dollar invested is now worth $77.

    So betting against GILD has been a poor idea. Keep some room in your mind for the possibility that GILDs pipeline might have more gems on the way.
    Jul 28, 2015. 03:00 PM | 4 Likes Like |Link to Comment
  • What To Expect From Gilead's 2Q Earnings: The Theory Behind The Madness [View article]
    Thanks for another excellent article!

    I share much of the PharmaDoc viewpoint but I am playing it a little different. In addition to a long position I have additional shares that I would have sold at $120 but at current levels I will hold.

    The down side is limited for now and I believe GILD will make an acquisition this year. It is possible that a pipeline announcement could add some excitement. In another 3 months I may need to take action and sell if GILD has not acted.

    My view is with MRK competition looming and late year jitters I want to be able to purchase shares expecting a possible 9 PE on weakness. GILD is aging fast so I agree it is not a biotech growth company. It is still growing for now however and may have some growth left.

    The market has been saying for a year that it doesnt like GILDs growth prospects. Somehow though it seems unfair that the average biotech company as represented by the IBB has a 48% return vs a GILD that quadrupled earnings and has only a 20% return.
    Jul 28, 2015. 01:05 PM | Likes Like |Link to Comment
  • Is Gilead A Buy Pre Earnings? [View article]
    Thanks for an interesting article!

    GILD is cheap and a good buy!

    They need to work hard to build business for 2018 and beyond. Investors that look out that far are asking if they really see growth ahead?

    Focusing on 2015 EPS could get the share price as high as $125. Investors however have been saying for a year that they have deep reservations about GILD growth long term. The 2015 action to buy EpiTherapeutics and its 2 employees for $65MM underwhelms even GILDs biggest fans of which I am one.
    Jul 27, 2015. 03:03 PM | 4 Likes Like |Link to Comment
  • The Importance Of Newly-Released Data For Gilead's HIV Drug Patent Cliff [View article]
    Excellent article!

    I remain very long GILD but I also have some criticism building in my mind regarding the GILD pipeline. Both HIV and HCV are entering a stage of increased competition and reduced levels of growth.

    GILD's real pipeline outside of maintenance activity (HCV/HIV) is uninspiring and for a year the market has been telling us that GILD deserves a 10 forward PE and not a 20 or 30 PE.

    The rise in CELG has it valued at nearly 4 times GILD on an PE basis. Further I would submit that it is because CELG has stuffed its pipeline with potential for growth in one of the greatest periods of medical innovation in history.

    I am not asking GILD to emulate CELG which may be overpriced. At the same time GILD's effort to build for the future is unsatisfactory to investors and shares are priced accordingly.

    GILD's pipeline might seem valuable to many of us but the market wouldnt put $10 billion on it. What kind of a pipeline valuation should a $170 billion market cap company have? That is why the market as a whole trades as if GILD is starving its future and even $4.00 2Q EPS wont change that.

    If GILD shares traded at a CELG PE they would be trading at $446.80 based on Fridays close. My point is that by acquiring the pipeline assets necessary to solidify a growth expectation in the market GILD shares could trade at 200% of its current level.

    For the record I believe GILD has a better pipeline than the market does and I think they will take action to improve future prospects. The biotech industry ages rapidly and RCPT probably decided they wanted a marriage with more upside.
    Jul 27, 2015. 02:25 PM | 2 Likes Like |Link to Comment
  • Seeking Alpha's Biotech Weekly: What Can Biogen Tell Us About The Sector? [View article]
    So we had a little drop and more than a little if your holding much BIIB. Really however biotech is up significantly this year and for that matter for 5 years.

    Lets take GILD, REGN and CELG and note that all are up nicely. BIIB I thought had poor 1Q EPS and the Alzheimers story with nothing marketed for 5 years smacked of a PR event for shares. So I sold 50% of my BIIB. 2Q seemed to validate that view.

    So are biotech stocks expensive yes but perhaps not for the degree of reliable growth offered. I sold my REGN about a month back and have regretted it since with what could be the biggest blockbuster in a long time in Praluent. But it is very pricey.

    CELG is expensive but they have stuffed as much growth as possible into their pipeline. So I do see long term growth even if we have 6-12 months of no growth or worse at some point. GILD has been and still seems like a value. Amgn also seems a fair value. Small cap biotech is expensive but everyone is trying to buy the drug potential they develop.

    So on the bullish side we may be in the middle of one of the greatest periods of drug discovery and development. A period of cures, great promise in major disease areas like cancer and cardio. A focus on many orphan diseases with dramatic results on the horizon. We have stem cells growing body parts that get injured. We have the human genome opening up everything. The fountain of youth might not be out of the question.

    On the other hand perhaps we have lived off generous provisions of the ACA inspiring growth in drug spending above reasonable long term expectations. Perhaps investments in new drugs are facing more competition than ever before and returns on investment will become difficult for the vast majority of biotech as 1000 cancer drugs fight to win in the market. Perhaps the cost benefit ratio of charging $500k to extend a low quality of life by a few months is irrational.

    So far however I dont have a problem with biotech stocks dropping on poor earnings. In fact I worry more when they all rise by the same amount with vastly different earnings performance.
    Jul 25, 2015. 02:15 AM | 7 Likes Like |Link to Comment
  • Why IBM Actually Had A Great Second Quarter [View article]
    For anyone who is not paid by IBM that might read this board

    IBM is a company in decline working on its 14th straight quarter of declining revenue. Every division has entered decline and IBM is selling the message that it is not in decline and just stable with currency effecting its business.

    They havent explained how currency caused the drop in their US business either. The truth is IBM wants to be a cloud company because they are losing business. AMZN's 80% increase in cloud revenue is coming out of IBM. ORCL's flat revenue is also coming out of IBM as prices drop. Both have now passed IBM and have a higher valuation.

    Salesforce is about 1/3 the valuation of IBM but with a 29% 5 year growth rate will have a higher market cap after 5 years even if IBM can arrest its decline. Several other consulting companies are growing as well and all are feeding at the IBM trough.

    Meanwhile IBM thinks its leadership is excellent and is pursuing a goal of buying back a higher percentage of stock than the decline in their business.
    Jul 24, 2015. 06:36 PM | 2 Likes Like |Link to Comment
  • Biogen Q2 top line up 7%; EPS up 31%; guidance lowered; shares off 6% premarket [View news story]
    After last quarter I cut my BIIB allocation by 50%. It was my opinion that was a poor quarter and the PR campaign about Alzheimers which if successful is 5 years away was a cheap stock manipulation event.

    That said I never sell out of a position like BIIB.
    Jul 24, 2015. 09:44 AM | 3 Likes Like |Link to Comment
  • Caterpillar (CAT) Douglas R. Oberhelman on Q2 2015 Results - Earnings Call Transcript [View article]
    CAT is probably not a bad buy at $75

    It has had a convergence of negative forces from currency, construction, mining equipment and world malaise.

    Next year at this time US currency should be better, and activity should be better. It will not trade at a 12 PE at that time.
    Jul 23, 2015. 05:32 PM | Likes Like |Link to Comment
  • ConocoPhillips: A Surprise Dividend Hike [View article]
    At $59 I bought a 10% share of my long term position

    Today 7/23 at $53.70 another 10% share. Also recommend putting in a $49 buy for 10%.

    It is still early in an Oil crash, with no bankruptcies, no pain, no real agony, no blowout low on high volume, no hard core budget slashing. By historical standards I am too early.

    My guess is after the summer is over it will be a painful fall season. By 2017 things will be moving upward. Greed kills!
    Jul 23, 2015. 01:52 PM | 2 Likes Like |Link to Comment
  • IBM -6.3%; Street cuts estimates, debates turnaround after mixed Q2 [View news story]
    Judging by recent comments only a few long term IBM shareholders actually view SA anymore. Most of the comments anymore appear to be made by people paid by IBM.

    As we proceed into the 4th year of shareholder value declines and no end in sight perhaps the IBM paid commenters can debate among themselves. One thing is for sure and that is long term shareholders arent extolling the greatness of IBM with their shares dropping from $215 down to $160 during a great bull market.
    Jul 23, 2015. 10:06 AM | Likes Like |Link to Comment
  • An Assessment Of Celgene's Deal For Receptos [View article]
    I understand DRx point as there does exist some risk in CELG and especially after another jump. It does not seem like a time to chase CELG and patient investors could likely see a more attractive buying opportunity.

    With regard to selling CELG over the years I have developed a strategy where huge long term winners are held and not sold. I could violate that rule if I thought the business was threatened but not on perception of valuation.

    CELG is one of the best long term successful growers. For the history of CELG sellers have been losers. Through most of that period valuation seemed very high.

    So one cannot complain that CELG isnt investing in their future. They have stuffed their future with a tremendous quantity of the best product opportunities. Given their track record perhaps investors should consider carefully decisions to sell out of CELG.

    I will also go one step farther. Trading CELG on valuation or timing has been a big loser historically. My recommendation would be to invest an amount of money each month or quarter into CELG and stick to it.

    Do you really want to sell a 20%+ growth company with a growing pipeline and in a growing industry? If so good luck! DRx might be able to make that work but you will likely end up with a portfolio of IBM and GE.
    Jul 23, 2015. 09:35 AM | 2 Likes Like |Link to Comment
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